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National Recovery Administration earnestly tried to correlate coals and establish comparative values so that their coals could move freely into all competitive territories. They never succeeded. I personally gave up some months to the effort attending meeting with various groups. We never could quite agree, and finally in January 1935 a disgusted public accepted chiseling sales with greatest relief. They want the type and kind of coal their various plants are suited for. Expect resistance if they fail to get it.
One thing more; the price provisions of this bill are most unfair to medium and offgrade coals. They will be the sufferers both in their home markets and in foreign markets.
Given the price set up of the coal with a higher value naturally the higher grade coal will sell first. After all the higher value coal has been sold, the lower grades will have their chance, not before.
Mr. Cooper. Mr. Chairman, you skipped one name, L. E. Woods. Is he here?
Mr. Hill. I understand he is not here. Is that correct?
Mr. HAWTHORNE. Mr. Woods is not here. You may strike his name from the calendar.
Mr. HILL. Mr. Suender.
STATEMENT OF E. H. SUENDER, REPRESENTING THE CONSOLIDA
TION COAL CO.
Mr. SUENDER. Mr. Chairman and Congressmen of the committee, my name is E. H. Suender, consulting engineer for the Consolidation Coal Co., operating mines in Pennsylvania, Maryland, West Virginia, and Kentucky. They are the second largest bituminous coal producers and produce over 40,000 tons of coal per day.
I am appearing for that company in opposition to the enactment of the Guffey-Snyder bill, H. R. 8479. We are opposed to it and to any other special legislation which substitutes complete governmental regulation of a basic industry for industrial management of that industry.
We do not believe that the inining and distribution by the producers of bituminous coal is affected with a national public interest to such extent that it is subject to Federal regulation under the commerce clause, any more so than other commodities, particularly such as oil, gas, lumber, anthracite, agricultural products, and others.
Producers, especially of these commodities, could argue with equal force with those who favor this particular kind of legislation that they ought, too, to be entitled to some protection in order that they might fix their prices at the expense of the public.
We do not believe that the bill, if enacted, will be sustained by the courts, nor that it can be enforced to assure that degree of market stability which is so desirable in every industry. Congress passed the antitrust laws, in the public interest, and when these laws were passed it was naturally difficult to stabilize the selling price of a commodity. Now Congress proposes to take this particular commodity and set the antitrust laws aside for it, believing that that will again be in the public interest. We do not think it will.
It is true that there is some public protection in the control by the commission of 5 impartial members, 2 representatives of the operators and 2 of the mine workers. The consumers of bituminous coal have a perfect right from their viewpoint to believe that there may be collusion between the operator and miner representatives on that commission, and they would then only need to have one of the impartial members join their viewpoint in order to make the public pay the bill. The personnel of the proposed commission, I say, from the consumers' viewpoint, is not only fantastic but bold in purpose.
Administration and enforcement by a Washington commission of nine men under the provisions of this bill is practically impossible, even with the army of accountants, clerks, engineers, investigators, and others that would be required to control and regulate the production of 500,000,000 tons of bituminous coal produced in 26 States. Investigations and fishing expeditions into every avenue, from the mine face to the consumer's smokestack, will be necessary if this bill is to be enforced.
Furthermore, we make the bare statement that the bill cannot and will not be enforced if it becomes a law.
The market provisions of the bill are unworkable, and if enacted into law and held constitutional it will be impossible of enforcement against the thousands of small producers, and not a few of some of the substantial ones. Any law that encroaches on the rights of individuals cannot be enforced unless a very substantial majority of those who are interested favor such a law.
Take the 22 district boards. Their first job is to determine the cost in their districts. There is not an operator in this room that can rise to his feet and say that that can be done. Taking into consideration the thousands of small bituminous producers. Every rise of a nickel or 10 cents in the selling price of bituminous coal brings its crops of new small producers.
The passage of the bill will result in a greatly increased price to the consumer, and not lower prices, as has been stated to this committee. Every increase brings its crop of new producers, as I just said. Thousands of truck mines have come into production as a result of the increase under N. R. A.
Increased selling prices always result in tonnage losses to rival fuels. That is a well-known fact. We have all had the experience. Tonnage losses result in higher prices, and these higher prices under the provisions of this bill are added to the costs, and then to the selling prices again, and thus a vicious upward spiral of prices and lowering of the tonnage produced occurs.
Over 60,000,000 tons of annual production in the last 10 years has been lost to rival fuels; and that is a conservative figure. That loss alone, if regained today, would give full employment for over 30 days to all of the men and all of the facilities that we now have. That is the most convincing reason why we should maintain this industry, pay fair wages, work reasonable hours, and keep the selling price as
Under the provisions of the bill the smaller producers with costs of production in excess of the weighted average of the field or minimum price area will be forced out of business. Thus, this bill very definitely discriminates against the small enterprises.
The labor provisions in the bill are not fair to either the producers or the employees as a whole, regardless of the question of constitutionality of the section of the act.
I want to address myself particularly to title I of the act, line 19, page 2, to the end of line 13, page 3. It reads:
That the excessive facilities for the production of bituminous coal have led to practices and methods of production and distribution that waste the coal resources of the Nation and burden and obstruct its interstate commerce, so that
control of such production and regulation of prices realized by the producers thereof are necessary to promote its interstate commerce, remove burdens and obstructions therefrom, and protect the national public interest therein; that practices prevailing in the production of bituminous coal directly affect its interstate commerce and require regulation for the protection of that commerce, and that the right of mine workers to organize and collectively bargain for wages, hours of labor, and conditions of employment should be guaranteed in order to prevent constant wage cutting and the establishment of disparate labor costs detrimental to fair competition in the interstate marketing of bituminous coal, and in order to avoid those obstructions to its interstate commerce that recur in the industrial disputes over labor relations at the mines.
We want to examine into this charge of excessive facilities, which presumably is largely the claimed necessity for the enactment of this bill.
In the first place, excessive facilities and over-development came about by two principal causes. One was a shortage of railroad equipment and the other was strikes. The John Hays Hammond Commission reports very definitely that those are the two outstanding causes for the excessive development of the bituminous coal industry. These strikes were principally in the unionized central competitive field.
I do not expect, Mr. Chairman and Congressmen, to dwell on this subject of unionization and to bring out that point very strongly, because I believe that the things that have hurt this industry are things of the past, water over the dam.
I believe we are on the way to a better understanding in this industry, and I do not believe there is any necessity for this legislation to complete that better understanding.
Mr. Vinson. When you say "better understanding”, are you including the relation of employer and employee?
Mr. SUENDER. Absolutely, and markets and everything else.
Judge Warrum and Congressman Snyder both testified that today and for over a period of 20 years this industry was able to produce 50 percent more tonnage than the consumptive demand made upon it. Let us examine into that.
The difficulty with this extra development work in the bituminous coal industry is that everybody seems to be quoting figures that were made way back in 1921. The conservation figures quoted by my friend, Judge Warrum, were taken from the John Hays Hammond report of 1921, and I submit that if we are doing anything in this industry we are making a little progress, anyway.
Mr. WARRUM. They were taken from the Natural Resources Board Report.
Mr. SUENDER. And they took them from the commissioners report in the year 1921, Judge Warrum. Your figures are there; I can read them for you.
But the statement was made that the industry was 50 percent overdeveloped, and that is not true, even at that time. There was overdevelopment of approximately 125 percent of consumptive demand, not 150 percent. But today, after the abandonment of many mines, brought about, mark you, by low selling prices over a period of years, and recent reduced schedules of working hours per week, the excess productive capacity over consumptive demand will not exceed 5 percent.
Mr. Vinson. If I caught your statement correctly, you say that there has been lost by the coal industry to competitive fuels some 60,000,000 tons annually.
Mr. SUENDER. That is right; in a 10-year period.
Mr. Vinson. And you state that that loss of 60,000,000 tons could employ every one in the coal industry today for 30 days?
Mr. SUENDER. With all the mines busy for over 30 days; yes.
Mr. VINSON. Then it seems to me that you prove positively that the productive capacity of the coal industry with those who are working in it today is 720,000,000 tons a year.
Mr. SUENDER. No; I am not proving that at all, Mr. Vinson.
Mr. Vinson. If 60,000,000 tons will keep everybody in the industry working for 30 days, then why would it not be 12 times 60,000,000 or 720,000,000 tons for the 12 months?
Mr. SUENDER. You are assuming that the dear public are going to buy this coal as you want them to.
Mr. Vinson. I am speaking of the potential productive capacity.
Mr. SUENDER. If you will just pardon me a moment and let me finish the argument, I think I will bring out some points you have in mind.
Mr. Vinson. All right.
Mr. SUENDER. The industry must of necessity have development and facilities to serve the trade satisfactorily in the months of peak demand. If, in such months of peak demand they can serve the trade satisfactorily by working 50 percent of the time then the industry is overdeveloped to the extent of 50 percent. On the other hand,
, if they have to work a full month to serve satisfactorily that peak demand, then the industry is not overdeveloped at all.
May I say that the industry today is overdeveloped to the extent of probably 5 percent, but notwithstanding that this overdevelopment is a mere 5 percent today, brought about by the wholesale shutting down of mines throughout this country-down in northern West Virginia 70 percent of the rail mines have been shut down over a period of 10 years, and mines are shut down in every district wherever you go-you have not found any large mines opening up as a result of even the better prices under N. R. A., but you have found thousands and thousands of mines opening where the price of the coal could not be controlled, and where the labor which they employ cannot be controlled, either under N. R. A., or under this particular bill.
The test of overdevelopment is not the comparison of annual production with annual capacity, but rather peak demand against capacity. That the industry is not now overdeveloped is clearly shown in the Department of Interior production figures for the months of peak demand in March 1934, and March 1935, when the industry worked very near full time and produced less than 40,000,000 tons of coal; whereas in a normal business month the peak demand runs anywhere from 52,000,000 to 60,000,000 tons.
Notwithstanding this very slight overdevelopment, this bill proposes, in the light of such facts, to set up a national coal reserve and purchase $300,000,000 worth of mines, leases, and lands, and to let the equipment of these mines purchased simply depreciate and be a permanent waste, which is altogether wrong in theory; to levy a tax on production; and to authorize the producer to add that tax to the selling price.
In other words, the consumer of bituminous coal is, in effect, told that he is to purchase $300,000,000 worth of cats and dogs and present them to the United States Government for the creation of a reserve, so that the producer who made a bad investment may have his losses mitigated or repaid to him in full.
The proposal is preposterous and we believe unconstitutional. It would remove vast areas of coal lands from State taxation and seriously affect school district revenues, and will not, in our judgment, accomplish its intended purpose. It will, we believe, eventually lead to the nationalization of the bituminous coal industry.
On the subject of conservation the bill proposes to have a commission of nine men investigate “The economic operation of mines, with the view to the conservation of the national coal resources."
Can it be possible that anyone seriously considers that this act, known as “The Bituminous Coal Conservation Act of 1935" should it become a law that nine men can improve on the brains and effort expended by management in this great industry in their continuous study and search for the maximum economical extraction and the efficient operation of their mines, over a long period of years-study and search that never ends? Those who write glibły on this subject give little consideration of the cost to the consumer, and the fact that higher prices mean loss in tonnage. Certainly we can get a greater extraction if cost to the consumer is not to be considered.
The price of bituminous coal in many areas is definitely fixed by the price of oil, natural gas, and hydroelectric power. Our tremendous coal reserves, plus our unharnessed water-power sites, do not warrant maximum extraction at considerably higher prices to the public.
Furthermore, if we are to interest ourselves in conservation of coal, we counteract this objective if we purchase marginal mines and abandon them for, say, 15 to 20 years. Many of such mines would never be reopened, and much of such abandoned tonnage would be permanently lost. A confirmation of that statement can be found in the statements of the engineers in the John Hays Hammond Commission report of 1923.
Congressman Snyder stated to this committee that the bill is offensive only to those interests who welcome a return to cut-throat markets in the hope that they may survive. We challenge that statement. It is not true. There is nobody who wants to go back to any cut-throat markets. There is nobody who is seeking bottomless prices.
The Consolidation Coal Co. resents that charge, and I am sure every other producer who had the opportunity would resent that charge. We admit its sensationalism, but we trust that not one member of your committee will give it serious consideration. The statement was, we believe, grabbed out of thin air. We never heard of a single producer who wanted a return of cut-throat markets. On the contrary, those who oppose this bill, and a great many of those who are in favor of this bill, are at present working earnestly in organizing central sales companies, patterned after the plan of Appalachian Coal, Inc., which has had Supreme Court approval. Mr. Vinson. Did you not have chiseling under N. R. A.?
Mr. SUENDER. You bet we did, lots of it. From the very beginning we had some of it, Mr. Vinson.